It’s only estate agents who see green shoots

The estate agent selling our flat is on holiday this week. Clearly all this talk of green shoots in the housing market has gone to her head. If the press releases I’ve been receiving this week are to be believed, we’re over the worst. “Activity in the property market has risen quite noticeably in the past couple of months, not just because of low prices and mortgage rates but because there is a feeling we now know where we are in terms of the broader economy,” says David Smith of Carter Jonas.

I asked a trader friend what he made of this. “I think estate agents are clueless,” he replied. “Most of them are too young to know what an economic cycle looks like.” The general opinion on his trading floor is that house prices have further to fall. “No one who I talk to thinks they will miss anything in property by waiting until the end of the year to buy,” he says.

The average British mortgage broker believes house prices have 9.2 per cent further to fall, according to Exact mortgages. “Housing market commentators would have us believe green shoots have been springing up everywhere, but for those in the know about the British mortgage market, sentiment hasn’t turned yet,” says Alan Cleary of Exact. “House prices can’t recover until the mortgage market is fixed – and that’s some way off.”

Still, there are certainly buyers creeping back into the market in my part of London. This week we viewed a couple of new-to-the-market properties on which we would consider making offers – if other buyers hadn’t got in there first. Who are these people, I asked the estate agent, as we stood outside a maisonette that had just gone under offer for the asking price. “Italians,” he replied. “They’re buying everything in central London, and they don’t care how much they pay.”

I imagine this is an exaggeration, but there is no doubt foreign buyers are providing competition for any British investor looking to take advantage of softer prices. “Sterling is very weak against the euro – London property prices are down about 60 per cent – so the investors I’m competing against do tend to be foreign,” says Peter, who runs a property investment fund. “I’m starting to buy again but I’m not hoovering things up. I don’t think you’ll make a lot of money on property right now.”Does he think things will get worse? “That’s the big question. I just don’t know. If it’s over, it’s been very quick. I think prices have at least another 10 per cent to fall.”

So is it futile, us trying to trade up in this market? No, according to David, who works for a fund management company in the City. He’s selling his family home in Clapham to buy a smaller house in London and a home in Hampshire. “Prices are still not cheap by historic standards, but we are nearer the trough than the peak. Liquidity tends to dry up in down markets. This argues for reâ€‘entering the market early.”

City boys appear determined to pour cold water on any green shoots dreamt up by estate agents, but they are watching the property market like hawks. In my opinion, it is impossible to know quite what is happening. On the way up prices go up and down, and on the way down they go up and down.